The Council of Economic Advisers has released the 2010 Economic Report of the President. You can find a link to the full report, as well as a summary of the highlights, here.
Quick summary: The economy was a mess when President Obama came into office, because of problems that were a long time in the making, including stagnating middle class incomes, rising health care costs, and flawed and under-regulated financial markets. The economy is still not great, with a slow recovery and lagging job formation expected, but it is in better shape than it would have been if the stimulus bills had not been implemented. We should still do more. Pass jobs support and health care reform now!
Today I attended a World Bank training on survey methods in developing economies. (I would just like to say, the World Bank has great food, and where do they get their papaya, because when I buy papaya here it always tastes funny.)
One interesting bit of the training seminar had to do with calibrating surveys to adjust for differences in perceptions or attitudes among respondents. To get a more concrete idea of the problem, imagine asking two people to rank their health from 1 to 10. The first person is a young, Olympic athlete with a cold and sprained ankle, who rates her health as 5. The second is an old, barely mobile man who had a good day and was able to do a lap around his building with his walker. He ranks his health as 8. Is he really more healthy than the athlete? No, but the respondent's relative baseline matters.
An example from actual research: Gary King, Christopher Murray, Joshua Salomon, and Ajay Tandon asked survey respondents in China and Mexico to rate their ability to participate in governance. Chinese respondents, on average, ranked their political efficacy higher than Mexican respondents.
Few people would really believe that citizens have more political efficacy in China than Mexico. More likely, what Chinese citizens considered to be a "high" level of efficacy was different from what Mexican citizens considered to be a "high" level of efficacy. The researchers devised a way to account for differences in the respondents' relative baselines. They used vignettes, or stories illustrating a particular level of political participation, and asked respondents to compare themselves to the hypothetical. Using this method, Chinese respondents ranked their political efficacy lower than Mexican respondents, on average.
Similar use of hypothetical vignettes can be used in surveys on other topics, including health, access to resources, education, etc., to ensure that respondents interpret questions similarly, and that their responses have the same meaning.
According to this post on the Freakonomics blog, when men and women ride in the car together, the man is much more likely to drive, even in households that consider themselves to be feminist. It's not clear why this is. Do men prefer to drive? Do women prefer to ride? Are men more likely to own the car?
Perhaps it is because women are worse drivers than men? Surprise! Stereotypes to the contrary, women are actually safer drivers than men. This is especially true among young adults. Don't believe it? Why do you think insurance premiums are higher for men? In fact, one study found that more testosterone leads to more bad driving in men: men with longer ring fingers (an indicator of more exposure to testosterone in the womb) had more traffic violations.
So guys, do your part for feminism and lower health care costs: let her drive half the time! Plus, then you can play with the on-board computer. Because everybody knows women are worse with technology than men...
This fascinating map (source here) highlights how much trouble the human species has feeding itself. If you are unfortunate enough to live in Africa or South Asia, you will struggle to consume sufficient calories to survive. If you are unfortunate enough to live in the United States, Canada, Australia, a handful of European countries, or a Gulf state, you will struggle to consume few enough calories.
Wouldn't it be great if developed economies could just ship off their excess calories and send them to calorie-deficient countries? Hey, don't eat that second donut-- FedEx it to India.
We actually do this with clothing. Clothing that is donated to Goodwill or similar stores, but goes unsold, is baled and sold by weight to developing countries. I purchased some of it when I was in Dakar. It provides local consumers with inexpensive, good quality clothing-- but it also puts local textile workers out of business.
Food, of course, is yet more complicated. Hungry people don't need your second donut so much as they need the protein- and vitamin-rich lentil veggie stew you SHOULD be eating. Many people who are calorie or vitamin deficient work in agriculture themselves, and they need not only food but a sustainable way to make a living. However, eating less would have the effect of lowering prices-- which would make food more affordable. And eating less junk food would lower demand for empty-calorie crops like sugar and corn, which might free up land for healthier crops.
I think the main lesson from this map, however, is to remind those of us in the developed world how lucky we are to have the problems we have. Health care costs exploding because people are overweight and living longer? At least they aren't starving and dying of malaria as toddlers. So we have to push people to go to the gym? The fact that physical work is optional is a sign that we live luxurious lives. If we can't figure out how to keep our population healthy, what chance is there for developing economies, whose challenges are even more daunting?
As a child, I was terrified of needles. I think my father, who is a physician, was very embarrassed to have me get shots at his office, because I would always cry. He would tell me how horrible tetanus, measles, and mumps were, but I was certain that I'd rather get ebola that get stuck with that needle.
I've learned to cope with needles (donating blood has helped a lot), but as I have grown more comfortable with immunizations, an increasing share of the population has become less comfortable with them. In states that allow it, about 2.5% of children exemptions from immunization requirements for personal beliefs.
From an economic standpoint, skipping immunizations is a rational decision based on perceived risks of disease and vaccines. Because innoculation has been so successful for diseases like measles, parents percieve their children to be at low risk of contracting the disease. At the same time, misinformation about ties between vaccines and autism, as well as actual but very small risks of adverse reactions to vaccines, lead parents to perceive vaccines as risky. With these perceived risks, it makes sense for parents to choose to forgo the risk of vaccinating their children, while depending on herd immunity to protect them from the risks of the disease. Essentially, these parents are free-riding off of those who choose to vaccinate their children.
At the same time, they are imposing negative externalities on the rest of the population. Most vaccines are less than 100% effective, and some people cannot be vaccinated for medical reasons. Those who choose not to vaccinate are more likely to get sick and pass diseases on to vulnerable segments of the population.
So what does economics predict the outcome could or should be? If nothing is done to compel more immunizations, it is likely that the situation will reach an equilibrium as fewer people immunize and diseases like measles become more common. As the diseases become more common, their perceived (and actual) risk will increase, providing more people to immunize their children. Unfortunately, this equilibrium will not be efficient, since parents will not account for the herd immunity benefits of vaccinating, nor the negative externalities of failing to vaccinate. More people will get sick or even die than would if people were required to vaccinate.
One solution to this, besides requiring vaccination, could be to require people choosing not to vaccinate to pay a fee. That fee could be used to reimburse people who have adverse reactions to vaccinations (since people who don't vaccinate are free-riding off those who do vaccinate and face the small risk of the vaccination). The fee could also be used to pay for medical care for those who get sick from diseases, since these people are the ones who bear the cost of the negative externality from not vaccinating.
In the midst of a health care debate with plenty of juicy, substantial issues that Americans really care about, the leading news coming out of President Obama's speech was Representative Joe Wilson's (R-SC) raucous outburst from the floor.
For those who haven't heard-- all two of you-- Rep. Wilson yelled "You lie!" after President Obama stated that his plan would not extend health benefits to illegal aliens. Since then, Rep. Wilson has apologized but maintained that the bill would give illegal immigrants coverage.
Until this incident, I hadn't realized that the cheers, boos, and whatever else you hear when the President addresses Congress actually came from the Members themselves. I always figured they made their staffers sit in the eaves to do any undignified shouting for them.
My quick calls on the fallout of the incident for parties involved:
GOP: ↓ The lack of decorum makes a disordered party look even less disciplined.
Health Care Reform: ↓ This won’t make real concerns go away, and it’s a distraction from the President’s message.
South Carolina: ↓↓ Are all their politicians nuts?
Rob Miller: ↑ Wilson’s 2010 opponent has reportedly raised $350,000 since the incident.
Rep. Wilson: ↔ He’s galvanized support for his challenger, but got himself some publicity, and could become a favorite of the conservative base. Palin/Wilson 2012???
I have worked in economic policy and research in Washington, D.C. and Ghana. My husband and I recently moved to Guyana, where I am working for the Ministry of Finance. I like riding motorcycle, outdoor sports, foreign currencies, capybaras, and having opinions.